The Nashville Symphony Orchestra has worked out a last-minute deal to pay off its lenders and avoid the auction of its $123.5 million concert hall. / Gannett/The (Nashville) Tennessean

by Walter F. Roche Jr., The (Nashville) Tennessean

by Walter F. Roche Jr., The (Nashville) Tennessean

NASHVILLE, Tenn. -- With a foreclosure auction just days away, the Nashville Symphony Orchestra - with a major assist from the group's biggest backer Martha Ingram - was able to reach a last-minute agreement to pay off its lenders and keep its $123.5 million Schermerhorn Symphony Center concert hall out of the banks' hands.

Though the agreement with the banks eliminates the immediate crisis, the orchestra still must deal with long-term financial problems that have caused repeated budget deficits for the orchestra.

Symphony treasurer Kevin Crumbo, whose company, KraftCPAs, is a paid adviser to the symphony, said the settlement closes out all the previously existing commercial bank loans, but said the organization still has major fiscal problems to address.

"The symphony has a lot of work to do," he said.

The symphony has started negotiations with its musicians as the current six-year contract is set to expire. Union officials already are contending that salaries account for only 30 percent of the overall budget, and that their members are not responsible for the symphony's fiscal woes.

Beyond that, symphony officials have signaled they plan to make deeper cuts to the annual budget. Earlier this month, for instance, symphony officials announced they were laying off more than two dozen part-time and full-time dining and rental employees as part of a cost-cutting effort.

Ingram steps forward to help

Still, Monday provided a bit of relief for the symphony, which has been battling with lenders for the past several months to hammer out a deal.

Symphony officials were quick to give praise to Martha R. Ingram, a board member and former board chairwoman, who has been the symphony's biggest financial backer over the past decade.

Moving forward, a realty company owned by Ingram now will hold the remaining $20 million mortgage on the Schermerhorn.

In a "letter to patrons" posted on its website, the symphony stated that Ingram "stepped forward to provide some of the liquidity needed to close this transaction."

"We are deeply grateful to Martha for her belief in the critical importance of the symphony to the Middle Tennessee community, and we understand that her investment challenges us to attract other donors and improve operating results," Ed Goodrich, the board chairman, and President Alan D. Valentine said in the letter.

Ingram said part of her contribution was the result of "the acceleration of a long-term charitable gift."

The agreement was first announced by a spokeswoman for Bank of America, the lead lender on the $83.5 million owed on the concert hall.

"It is because we recognize the orchestra's importance to this community that we were able to come together and work so hard to make this happen," said Shirley Norton, Bank of America spokeswoman.

As part of the agreement, an undisclosed lump sum payment was made to the lenders including Bank of America, Regions Bank, SunTrust Bank and Pinnacle Bank.

Though all parties, including Nashville Mayor Karl Dean, hailed the resolution of the crisis, details of the arrangement remained confidential.

Almost simultaneously with the announcement, a new $20 million mortgage was filed in the Davidson Registry of Deeds with the orchestra listed as the borrower and Bank of America as the lender. Bank of America immediately assigned the mortgage to James C. Gooch, a trustee for Symplace Realty Company.

Gooch, like Ingram, is a former chairman of the symphony board and an attorney and partner with the firm of Bass, Berry and Sims.

The terms of the assignment were not disclosed and Gooch did not respond to a request for comment. There is no record of incorporation papers for Symplace Realty on file with the Tennessee Secretary of State and there are no other transactions involving Symplace on file with the Registry of Deeds. A spokesman for Ingram said she owned Symplace Realty.

Details still unclear

Crumbo, the symphony's board treasurer, said some details of the arrangement were confidential, though some additional details could be disclosed at the end of the fiscal year and after contract negotiations with musicians are completed.

The orchestra's fiscal year ends July 31, the same day the current contract with musicians expires. Both sides have agreed to a media blackout during those contract talks.

The confrontation with the banks was triggered in mid-March when symphony officials decided not to renew a letter of credit backing the $102 million bond issue, which financed the original construction of the Schermerhorn Symphony Center. The interest costs for renewal were simply too high, symphony officials said.

Regions Bank, trustee for the bondholders, then called in the bonds, drawing down on the existing letter of credit just before it was due to expire. The lenders then announced they were initiating foreclosure proceedings and set a June 28 date for an auction of the concert hall.

Throughout that period new details about the financial problems emerged, including the release of the latest tax return which showed expenses exceeded revenues by $11.7 million in the fiscal year ending July 31, 2012.

Though the depth of the crisis only emerged over the past few months, the signs of problems were visible in tax returns made public over the past few years as expenses topped revenues by up to $20 million a year.